Glucocorticoids (GCs) are hormonal regulators of stress. They accelerate red blood cell production rate, an effect that is well established by mouse genetics, by in vitro erythropoiesis systems, and by human disease syndromes in which GCs are dysregulated. The use of GCs in the treatment of anemia is complicated, however, by their severe side effects, and is therefore limited to conditions where Erythropoietin (Epo) treatment is refractory or contraindicated, including Diamond Blackfan Anemia and other bone-marrow failure syndromes. The translational importance of GCs is apparent from their use in systems currently under development for the in-vitro generation of red blood cells for transfusion. Understanding the molecular action of GCs in erythroid progenitors could facilitate the development of novel erythropoiesis-stimulating agents that have fewer side-effects than GCs, and that improve the efficiency of generating red blood cells in vitro. Functionally, GCs increase erythropoietic rate by delaying the switch from self-renewal to differentiation in erythroid progenitors. The molecular mechanisms underlying this action are largely unknown. Based on our recently published work and on preliminary data, we propose a novel hypothesis of GC action that implicates the cell cycle S phase and DNA methylation as novel regulatory targets. We recently showed that both fetal and adult erythropoiesis entail genome-wide DNA demethylation, a unique global epigenetic modification in somatic cells (Shearstone et al., Science 2011). Global demethylation is tightly correlated with demethylation at erythroid gene promoters, and is a rate-limiting for their transcriptional activation. Further, global demethylatin is dependent on a marked change in S phase of the cell cycle, which becomes shorter and 50% faster with the switch from self-renewal to differentiation. The cyclin-dependent kinase inhibitor (CDKI) p57KIP2 is a key negative regulator of this switch. p57KIP2 is also a direct transcriptional target of GCs. Our preliminary data show that, in the presence of GCs, erythroid progenitors fail to downregulate p57KIP2, fail to accelerate S phase, and fail to undergo DNA demethylation, thereby delaying erythroid gene transcription. In this proposal, we investigate the hypothesis that high levels of GCs during erythropoietic stress inhibit the switch from self-renewal to differentiation by inducing p57KIP2, thereby inhibiting S phase acceleration, global DNA demethylation and erythroid gene induction. We will test this hypothesis in vivo using mouse models of erythropoietic stress and mice deleted or mutated for either p57KIP2, the GC receptor, or DNA methyl transferase 1 (Dnmt1), with the following three aims: 1) Determine the role of p57KIP2 in the GC-mediated erythropoietic stress response 2) Determine whether GCs prolong S phase in erythroid progenitors during stress 3) Determine whether GCs delay the onset of global DNA demethylation during stress. This work focuses on a unique epigenetic modification and has the potential to identify conceptually novel regulatory mechanisms, with translational implications for therapy of Epo-resistant anemia.